Category: Investment

Super excess contributions tax: late payment not “special circumstance”

Two recent cases have highlighted the need to ensure that superannuation contributions are actually received by the fund by the relevant date, not mere paid by the employer by that date.

In AAT Case [2012] AATA 322, Re Rawson and FCT, the Administrative Appeals Tribunal (AAT) upheld an excess contributions tax assessment and affirmed the commissioner’s decision that there were no “special circumstances” under section 292-465 of the Income Tax Assessment Act 1997 to warrant reallocating an excess contribution received late via BPay.

In AAT Case [2012] AATA 334, Re Paget and FCT, the AAT upheld an excess contributions tax assessment after ruling that there were no “special circumstances” under section 292-465 of the Income Tax Assessment Act 1997 to reallocate to an earlier financial year an excess contribution made via an electronic funds transfer (EFT).

Both these cases involve payments made to a fund just before, or on, 30 June but not received by the fund until early July becuause of processing times by banks and the bPay service. Consequently the contributions are deemed to have been in the later financial year. The timing difference tipped the members over the contributions cap and left them liable to excess contributions tax.

 

ASIC’s new tools to plan for retirement

ASIC has launched a new retirement planning publication and online calculator at a meeting of the Australian Government Financial Literacy Board.

People planning their retirement finances now have two new tools to help them make informed decisions. Financial Decisions at Retirement clearly explains the financial choices available to people at retirement and the pros and cons of each retirement income option.

The guide covers:

  • when you can access your super
  • how much money you’ll need in retirement
  • how you can use your super when moving to part-time work
  • the benefits and drawbacks of withdrawing super as a lump sum or income stream
  • how low-tax retirement income streams work, and
  • risky or more complex investment strategies to think twice about.

To accompany the new guide, ASIC also launched an upgraded MoneySmart Retirement Planner, an online calculator that shows people how to boost their retirement savings in simple, sensible ways.

ASIC Chairman, Greg Medcraft said, ‘The MoneySmart Retirement Planner provides people with an estimate of how much they are likely to have in every year of retirement and even calculates the best way to make extra super contributions. It also generates a personalised printout for people to give to their employer to increase their super contributions.

‘Financial Decisions at Retirement will help people decide what to do with their retirement nest egg. It has been extensively user-tested to ensure it meets the needs of people on the verge of retirement. Trial users said the guide explained a complex subject in simple terms. They liked the case studies, explanations of different super income options and unbiased, simple facts. They also said they wanted to be better informed about retirement income choices,’ said Mr Medcraft.

Financial Decisions at Retirement should be used to complement professional financial advice.

View, download or order copies of Financial Decisions at Retirement (new window)

To use the Retirement Planner, also visit www.moneysmart.gov.au (new window)

SMSF member verification system helps with rollover process

The
introduction of the SMSF member verification system has given large
APRA funds access to SMSF information held by the Australian Taxation Office to assist in
determining whether a rollover request to an SMSF is for a legitimate
SMSF member.

Large super funds will only roll over to an SMSF where they have a successful SMSF member match using the new system.

Feedback
on the system from large funds has been very positive, with the new
system reducing rollover processing times and removing the need to
request further documentation from members to verify SMSF membership
(for example, certified copies of SMSF trust deeds). The new system also
provides confidence that a rollover request to an SMSF is legitimateThis
new service has obvious benefits for SMSF trustees wishing to roll over
into their SMSF from large funds.

However, SMSF trustees who have not
kept up to date with their administrative obligations (for example,
informing the ATO of any changes to their SMSF membership) may find that they
will not be able to roll over to their SMSF.

SMSF
trustees are required under the super regulations to inform us of any
changes to their SMSF within 28 days of the change. This includes
changes to:

  • the name of the SMSF or corporate trustee
  • addresses (including postal, registered and addresses for the serving of notices)
  • trustees, directors and membership.

Where a large super fund does not have a successful member match for a
rollover request, they will direct their member to contact the ATO.